I96I Aptil 26. M/s. FRENCH INDIA IMPORTING CORPORATION, DELHI v. (1962] THE CHIEF CONTROLLER OF IMPORTS & EXPORTS AND OTHERS. (P. B. GAJENDRAGADKAR, A. K. SARKAR, K. N. WANCHOO, K. C. DAS GUPTA and
N. RAJAGOPALA AYYANGAR, JJ.) French Establishments-Agreement to import goods-De facto transfer of administration to India·-lmporter, if liable to pay penalty and customs duty-French Establishments (Application of Laws) Order, r954, cl. (6)-French Establishments (Administration) Order, r954–Sea Customs Act, r878 (8 of 1878), s. 167(8). The petitioners entered into agreements with certain
British firms for the import of cycles and cycle-parts to Pondi- cherry, which was then a French Establishment, in the manner provided by French law. The goods arrived at Pondicherry after the French Establishments had merged into India on the basis of the Agreement dated October 2r, r954, between the Union of India and France, which was to be operative from November r, r954.
By virtue of the said Agreement two Orders, dated October 30, r954, were issued by the Ministry of External Affairs under the Foreign Jurisdiction Act, rg.17, being S.R.O. 3314, the French Establishments (Administration) Order, r954, and S.R.O. 33r5, the French Establishments (Application of Laws) Order, 1954· The first saved the operation of the pre-existing French Law except in so far as it was repealed by the second, which extended to French Settlements certain Indian Statutes· specified in the Schedule and amongst these were the Sea Cus- toms Act, r878, the Tariff Act, r934, the Import and Export (Control) Act, r947, and the Foreign Exchange Regulation Act, r947. These Orders came into force on November r, 1954· On the same day the Government of India, by a Notification, appointed a Controller of Imports and Exports for the French Settlements. Paragraph 4 of this notification called upon the licence-holders under the French Law to apply to the Controller for validation of the licences held by them. Paragraph 17 of the Agreement, while saving import of goods validly ordered prior to the de facto transfer, made such goods liable to customs duty. As the goods arrived at Pondicherry on December 4, r954, the Customs
Authorities took the view that the import was in contravention of the Indian Statutes and ordered the petitioners to pay a penalty under s. r67(8J of the Sea Customs Act, as also customs dutv. The Central Board of Revenue on appeal upheld the
order and the Central Government in revision, while affirming that decision, reduced the penalty. Paragraph 6 of S.!~.O. 33r5 provided as follows,- "Unless therefore specially provided in the schedule all
laws in force in the French Establishments immediately before the commencement of this order which correspond to the enact- French India ments specified in the schedule shall cease to have effect, save as Importing Cor- respects things done or omitted to be done before such com- poration, Delhi
mencement'', v. The question for determination was whether the petitioners Chief Controller of were liable to pay the penalty under s. 167(8) of the Sea Customs Imports & Exports Act, and also the Customs Duty.
Held, (per curiam), that in view of the decision of this Court in Universal Imports Agency v. The Chief Controller of Imports and Exports, the petitioners were not liable to pay the penalty under s. i67(b) of the Sea Customs Act.
Universal Imports Agency v. The Chief Controller of Imports and Exports, [1961] 1 S.C.R. 305, followed. Per Gajendragadkar, Wanchoo and Ayyangar, Jj.-That decision of this Court, however, did not apply to or absolve the petitioners from the liability to pay the customs duty.
In order to determine the exact scope of the words "things done" occurring in para. 6 of S.R.O. 3315, the two orders, S.R.O. 3314 and S.R.O. 3315 must be read along with para. 17 of the Agreement and para. 4 of the Notification of November l, 1954, appointing the Controller and so determined there could be no doubt that the saving clause afforded no protection to the petitioners so far as their liability to pay the customs duty was concerned.
Per Sarkar and Das Gupta, JJ.-The words "things done" occurring in para. 6 of S.R.O. 3315 as construed by this Court in Unive1'al Imports Agency v. The Chief Controller of Imports and Exports, cover the petitioners' liability to pay not only the penalty but also the customs duty and so long as that decision stands, it has to be followed.
Universal Imports Agency v. The Chief Controller of Imports and Exports, [1961) l S.C.R. 305, discussed. There is nothing in the Order S.R.O. 3315 itself which renders the saving provision in para. 6 inapplicable to the levy of customs duty nor does any later law deprive the petitioners of its protection.
There can be no justification for reading into the Order S.R.O. 3315 anything to the contrary contained in para. 17 of the Articles of the Inda-French Agreement. ORIGINAL JURISDICTION:
Writ Petition No. 36 of 1960. Petition under Art. 32 of the Constitution of India for the enforcement of fundamental rights. N. 0. Chatterjee, D. R. Prem, R. Ganapathy Iyer and G. Gopalakrishnan, for the petitioner.
(1962] B. Sen, R. H. Dhebar and T. M. Sen, for the respon- dents. French India Impo>ting Cor~ 1961. April 26. The Judgment of Gajendra- poratwn, De/h• gadkar, Wanchoo and Ayyangar, J J., was delivered by Chief c0: 1, 011,, of Ayyangar, J., and that of Sarkar and Das Gupta, JJ., Imports & Exports was delivered by Das Gupta, J.
AYYANGAR, J.-This is a petition under Art. 32 of Ayyangar f· the Constitution praying for a writ, order or direction in the nature of certiorari calling for the records relat- ing to the levy of customs duty and penalty on cer-
tain cycles and cycle-parts imported by the petitioners, to quash the said order and for a direction to the res- pondents to restore and refund to the petitioners the customs duty and the penalties realised from them for
releasing their goods. The Chief Controller of Imports and Exports, Pondicherry, The Collector of Customs, Pondicherry, The Central Board of Revenue, New Delhi, Chief Commissioner, Pondicherry and the
Union of India have been made respondents to the petition. From the nature of the order sought and the array of the respondents it would be apparent that the matter involved in this petition is whether the respondents
were justified in (a) levying customs duties on the goods imported by the petitioner and (b) imposing a penalty on them for effecting these imports. We shall now briefly narrate the facts necessary to
understand the points arising for decision. The peti- tioners who are citizens of India placed an order on August 6, 1954, with certain firms in the United Kingdom for the despatch of cycles and cycle parts to
Pondicherry-which was at that date the principal French establishment in India. According to the law which then obtained in Pondicherry territory, merchants desiring to do business there had to have
"a patent" or licence from the authorities for carrying on such business. The petitioners applied for such a "patent" to the authorities on August 14, 1954, and they were granted one on August 18, which was to be
effective from August 1, 1954. The order placed with U. K. firms was accepted and the goods covered by the indents were shipped from the U. K. ports on October 11, 1954. The foreign exchange needed for
'96' effecting this import could under the French Law have F.enc!i India been obtained either from or on the authorization of Impo.ting Co•- the Head of the Department of Economic Affairs at po>ation, Delhi Pondicherry or by what has been termed purchase in
v. the open market. In pursuance of these facilities the Chief Confroll" of moneys required were transmitted through bankers Impods & Exports who made payments on behalf of the petitioners in
Ayyangar 1. the United Kingdom and the goods arrived in Pondi- cherry on December 4, 1954, the Bill of Entry being presented to the Customs Authorities for clearance on the 17th of that month.
Mean while, political changes took place in the governance of Pondicherry and other French settle- ments. An agreement was entered into between the Governments of the Union of India and of France
under which the administration of the French Settle- ments, including Pondicherry, was ceded to the Union Government. This agreement which was signed on behalf of the two Governments on October 21, 1954,
was to be effeotive from November 1, 1954. On Octo- ber 30, 1954, two notifications were issued by the Ministry of External Affairs in pursuance of the agree- ment dated October 21, 1954, between the two
Governments. They were respectively S.R.O. 3314 and S.R.O. 3315. As the questions arising for deci- sion in the petition turn on the proper construction and legal effect of these two notifications, it would be
necessary to deal with them in some detail, but for the purpose of the narration of facts, it would be sufficient to say that while S.R.O. 3314 saved the operation of the pre-existing French Law except in so
far as it had been affected by S.R.O. 3315, the latter repealed such laws to the extent they were inconsis- tent with the Indian enactments set out in the Sche- dule whose operation was extended to Pondicherry
and the French settlements. Among the Indian enactments so applied to Pondicherry were the Foreign Exchange Regulation Act, 1947, the Import and Export (Control) Act, 194 7, the Sea Customs Act,
1878, and the Tariff Act, 1934. [1962] I961 The Bill of Entry was, as stated earlier, presented to the Customs Authorities at Pondicherry on Decem- French Tndia ber 17, 1954, and it would be seen that by that date
Importing Cor- poration, Delhi Pondicherry was being administered as part of the v. Union territory with the Indian laws referred to ope- Chief Contrclier of rating in the area. The customs authorities at Pon- ·Imports & Expo"' dicherry took the view that as the consignment im- ported by the petitioners did not reach the port of
Ayyangar ]. b c b Pondicherry eiore Novem er 1, 1954, when the Union Government took over the territory, the impor- tation was without authorization of the Indian law and therefore in contravention of the Import and Ex-
port Control Act and the Orders issued therein, the Sea CLJstoms Act, the Tariff Act and the provisions of other relevant enactments. After a notice to the petitioners to show cause why the goods should not
be treated as having been imported without a licence granted under the Import and Export (Control) Act, the Customs authorities at Pondicherry after considering their explanation decided against the petitioners and
directed them to clear the goods on payment of duty and of a penalty which was levied under s. 167(8) of the Sea Customs Act. This order was passed on March 3, 1955. The petitioners thereupon preferred
an appeal to the Central Board of Revenue who dis- missed it by their order dated July 31, 1956, and thereafter the petitioners filed a revision to the Cen- tral Government who dismissed it by their order
dated January 8, 1957, but reduced the penalty im- posed. It is in these circumstances that the petitioners have approached this Court for the reliefs set out at the beginning of this judgment.
The following facts would emerge from the above narration: (l) that firm contracts had been entered into by the petitioners with the foreign-sellers long before November 1, 1954-the date of the transfer of
Pondicherry, (2) that the petitioners had the authori- zation of the French law by holding the "patent" granted to them on August 18, 1954, and effective from August l, 1954, to carry on business in Pondi-
cherry, (3) that the foreign-exchange requirements for effecting the importation had been provided for by the petitioners in a manner authorized by the French law, r961 (4) the goods, however, arrived in Pondicherry after
French India the date of the de facto transfer. In these circums- Importing Cor· tances the questions raised for decision are: (l) whe- poration, Delhi ther under the terms of the relevant notifications, to
v. which we shall immediately refer, the importation was Chief Controll" of unauthorized for want of an import licence so as to Imports & Export• render the petitioners subject to the levy of a penalty
Ayyanga' J. under s. 167(8) of the Sea Customs Act, (2) whether the petitioners have a right under the relevant notifi- cations to have the imported goods cleared from the Pondicherry port without the payment of the customs
duty leviable under Indian law in the area from and after November 1, 1954. We have already referred to the two notifications by the External Affairs Ministry, the details of which we
shall now proceed to state. By virtue of the jurisdic- tion obtained by the Union Government under the agreement between the two Governments dated Octo- ber 21, 1954, S.R.O. 3314 was issued in exercise of the
powers conferred by the Foreign Jurisdiction Act, 1947, and came into force on November 1, 1954, when the agreement became effective. Its principal func- tion was to provide for the continuance of the law
which previously prevailed in Pondicherry except in so far as it was varied by other notifications issued by the Union Government extending Indian Laws to that territory. Paragraph 5 of S.R.O. 3314 provided:
"5. All laws in force in the French Establishments or any part thereof immediately before the com- mencement of this order and not repealed by para- graph 6 of the French Establishments_ (Application
of Laws) Order, 1954, shall continue to be in force until repealed or amended by a competent autho- rity." The other provisions of this order are designed with the same objective, viz., the continuance of laws until
other provisions are made by a competent Legislature or authority. The provisions contained in S.R.0. 3315 are of more immediate consequence for the pur- pose of this petition. Paragraph 3(1) ofthis order
provided: I96I French India Importing Cor- poration, Delhi v. Chief Controller of Imports &- E:rports Ayyangar j. [1962) "The enactments specified in column 3 of the schedule as in force before the commencement of
this order are here by applied to, and shall be in force in the French Establishments subject to: (a) …….. ····· …………………………………………. . (b) …………………………………………………….. . (c) The subsequent provisions of the order."
Paragraph 6 which was in the nature of a saving clause ran: "Unless therefore specially provided in the schedule, all laws in force in t.he French Establish- ments immediately before the commencement of
this order, which corresponds to the enactments specified in the schedule shall cease to have effect, save as respects things done or omitted to be done before such commencement."
Among the laws extended to Pondicherry under S.R.O. 3315 were, as already noticed, the Sea Customs Act, 1878, the Reserve Bank of India Act, 1934, the Imports and Export.s Trade (Control) Act, 1947, the
Foreign Exchange Regulation Act, 1947, and the Indian Tariff Act, 1934. In the absence of the saving contained in the last words of paragraph 6 of S.R.O. 3315 "as respects things done or omitted to be done
before such commencement", the previous French law or the authorizations or permits obtained thereunder, would have become repea.Ied or exhausted and the import to be legal would have to be in conformity
with the laws applied to the territory by virtue of paragraph 3 with the result that the orders of the Customs Authorities in the present case could not be open to challenge. The questions therefore are whether this saving pro.
tects the petitioners from: (a) the liability to the penalty, and (b) from payment of customs duty. We shall deal first with the levy of the penalty. This matter is wholly concluded in favour of the petitioner
by the judgment of this Court in Universal Imports Agency v. The Chief Controller of Imports and Ex- ports (' ). There, as here, a contract had been entered into with a foreign supplier for the despatch of goods
(1) [1961] 1 S.C.R. 305. to the port of Pondicherry in the months preceding z96z the transfer. The goods however arrived after N ovem- French India ber 1, 1954, and the customs authoriti~s acting under Importing cor- the provisions of the se·a Customs Act, treated the poration, Delhi import as unauthorized, and adjudged the goods to
v. confiscation and also inflicted a fine. Petitions were Chief Cont'°ll" 0! then filed under Art. 32 for quashing these orders oflmport'.!:__Exports confiscation and fine and for directing the return of
Ayyangar J. the goods. It may be mentioned that the present petitioner was an intervener in the petitions the11 before this Court. This Court held that the words "things done" in paragraph 6 of S.R.O. 3315 were
comprehensive so as to include a contract effected before November 1, 1954, though its legal effect and consequence projected into the post-transfer period and the goods were imported only after November 1,
1954. The petitioners then before the Court having authority under the French law which prevailed before November l, 1954, to import the goods and having placed the orders and effected the imports in pursu-
ance of that law, this Court held that the imported goods cGuld not, notwithstanding that they were actually brought into the territory after Novem- ber 1, 1954, be confiscated on the ground that they
were imported without a licence required under the Imports and Exports (Control) Act and the Sea Cus- toms Act. Mr. Sen-learned Counsel for the respondent-urged some points of distinction between the facts in the
Universal Imports Agency's case(') and the case now before us, but having examined them we find there is no substance in the argnment. Learned Counsel sub- mitted that in the present case the import was effect-
ed not by opening Letters of Credit but by payment by bankers' draft and secondly, that the foreign exchange required for payment to the U. K. supplier was met in the present case by open market purchases
and not by the purchase of foreign exchange from French Banking Establishments. In our opinion, these are wholly immaterial. Learned Counsel had to admit that there was no legal requirement to have a
(1) [1961] l S.C.R. 305. [1962] '96' Letter of Credit and also that it was not in contraven- French India tion of French law which prevailed before Novem- Importing Cor- ber 1, 1954, to obtain foreign exchange requirements poration, Ddhi by what are termed "open market purchases". In v.
fact, in the case of the Universal Imports Agency(1) Chief Controller of the orders impugned were passed and were sought to Imports &- Exports b d b " h' C h _ e supporte eiore t 1s ourt on t e ground that the
Ayyangar J, foreign exchange requirements were met by "open market purchases" and that in consequence the importation was not authorized by the French law, and this contention was expressly negatived. We
therefore hold that the petitioners are entitled to relief so far as the petition relates to the quashing of the order imposing the penalty and for a direction to refund the same.
We now proceed to examine whether the claim of the petitioners that they are entitled to import the goods without payment of duty is justified by the sav- ing contained in the last words of paragraph 6 of
S.R.O. 3315. Mr. Chatterji-learned Counsel for the petitioners-had to admit that this matter was not the subject of decision in Univeral Imports Agency's case (1). Nor is it a matter for surprise that it was
not, because the petitioners then before this Court had never objected to the payment of the duty, and indeed the request they made to the Customs Autho- rities and which was rejected, which led to the peti-
tion, was that the authorisation which they had under the French law should be revalidated by the Indian Customs Aut.horities so as to permit the impor- tation on payment of normal duty as if the same were
licensed under the Import and Export (Control) Order; and that on payment of the duty they were entitled to a customs clearance under ss. 87 and 89 of the Sea Customs Act. This being the nature of the controversy
raised in this Court, the petitioners relied on Art, 17 of the Articles of Agreement between the two Govern- ments, to which we shall advert later, in support of their submission that while the Indian authorities
were entitled to levy such customs duties as were fixed under law for the several articles imported, the import (•) [1961] 1 S.C.R. 305, itself should be treated as authorised by the previous
r96r law whose operation was continued by the last words French India of cl. 6 of S.R.O. 3315 of 1954. Importing Cor- Further, as we shall presently show, there are pas- poration, Delhi
sages in the judgment of Subba Rao, J., who spoke v. for the majority, that on an importation effected after Chief Controller' November 1, 1954, customs duty would have to be Imp°''' & Expor paid according to the rates fixed under the relevant
Ayyangar J. Indian legislation. The submission of Mr. Chatterji however was that this relief which he claimed follow- ed logically from the reasoning of Subba Rao, J., and in particular he relied on the following passage:
" ……… A purchase by import involved a series of integrated activities commencing from the contract of purchase with a foreign firm and ending with the bringing of the goods into the importing country
and the purchase and resultant import formed parts of a same transaction. If so, in the present case the bringing of the goods into India and the relevant contracts entered into by the petitioners, with the
foreign dealers.formed parts of the same transaction. The imports, therefore, were the effect or the legal consequence of the 'things done', i. e.,. the contracts entered into by the petitioners with the foreign
dealers before merger." The argument of the learned counsel based on this passage was on the following lines: This Court has held that it is the agreement concluded with the foreign seller under which goods are contracted to be
imported, which constituted the "thing done". The legal consequence of that "thing done" was the act of importation, because that was the object and purpose of the contract, so far as the buyer was concerned.
This Court has held that the previous authorization by the French law, as it were, projected into the post- transfer period so as to justify the importer claiming that the importation was authorized and this is the
ratio of the decision. But this does not, learned counsel urged, exhaust the entirety of the rights of the importer. The previous French law authorized the import into a territory which was "a free port".
When therefore the importation was made by virtue [1962] of the authorization contained in the previous law, its effect should extend not merely to justify the claim to French India
Impoding Cor- have the import treated as one authorized under the porntion, Delhi relevant Indian law, but logically also as entitling the v. party to effect the importation without pn.yment of
Chfrf Controller of customs duty. Impods & Exp,.ts We find ourselves unable to accept this argument. Ayyangar 1. The expression "free port" in the case of Pondicherry merely meant freedom from restriction as to importa-
tion in the shape of licence, etc., and not a complete absence of duties leviable on importation. But that apart, if the submission of the learned counsel amount- ed to saying that the point about the exemption of
the petitioner from payment of customs duty is also covered by the decision of this Court in Universal Im- ports Agency's case('), we consider it wholly unjustifi- ed. As we have already shown, the liability to pay
customs duty was admitted by the petitioner and the reasoning by which he sought relief in this Court pro- ceeded on the basis that such duties were exigible. Besides, the entire reasoning of Subba Rao, J., was
directed to show that the authorization under the French law to effect the import should be held to pro- tect the petitioners then before the Court from being treated as having imported goods without a licence
under the Import and Export (Control) Act, and that is why in the penultimate paragraph of the order the conclusion reached is thus set down: "We would therefore hold that paragraph 6 of
the order saves the transaction entered into by the petitioners and that the respondents had no rights to confiscate their goods on the ground that they were imported without licence."
It is in this context that the observations extract- ed earlier on which Mr. Chatterji relies have to be understood. Besides, there are passages in the judg- ment which expressly refer to the fact that goods
imported after November l, 1954, would be liable to be charged duty under the relevant Indian fiscal statute. In mak:.ng this observation we have in mind the reference by the learned Judge to the Notification
(1) (1961] l S.C.R, 305. of the Central Government dated November 1, 1954, r96r and to the terms of Art. 17 of the Articles of Agree- hench India ment dated October 21, 1954, between the two Govern-
Importing Gar- ments (to both of which we shall advert later). The poration, Delhi decision of this Court is not, therefore, an authority v. to support the petitioner on the point regarding the Chief Co~lroller of right to import without payment of duty and we have Impo.ts"' Exports lo deal with the matter on the footing that it is res
integra. Nor can the plea based on the logic of the ratio of the decision in the Universal Imports Agency's case(') assist Mr. Chatterji to any material extent, because the content of the saving as respects "things done",
must ultimately be determined not by any interpreta- tion of these two words in vacuo, but in the context of the entire scheme of the two S. R. Os. read in the light of other material which could assist in arriving
at their scope. Thus, for instance, if S.R.O. 3315 cont1J.ined a specific proviso excepting from the saving as regards "ohings done" the obligation, say, to pay duties of custmns, it could hardly be contemled that
as the imports under pre-transfer contracts should be deemed to be authorised even if the goods arrive sub- sequent thereto, they should be exempt from the pay- ment of duty. No doubt there is no such express
provision but such a situation can also arise by neces- sary intendment. The right to exemption from payment of duty claimed by the petitioners would therefore have to depend on the proper interpretation of the relevant
notifications, because as already seen as the Sea Customs Act and the Tariff Act, etc., having been extended to Pondicherry territory, etc., from and after November 1, 1954, prima facie duty would be payable
on the import. We have already pointed out the inter-relation between S.R.0. 3314 and 3315 which were issued on the same date and by virtue of the same provisions and power. Paragraph 6 of S.R.O.
3314 which provided for the continuance of the pre- vious existing laws ran: (I) (1q6r] 1 S.C.R. 305. Ayyangar ]. French lndia Importing Cor- poration, Delhi v. Chief Controller of
Imports 0- Exports Ayyangar J. [1962) "All taxes, duties, cesses or fees which, immedia- tely before the commencement of this order were being lawfully levied in the French Establishments
or any part thereof shall, in so far as ·such levy has not been discontinued by any of the laws exten- ded to the French Esta.blishments by the French Establishments (Application of Laws) Order, 1954,
continue to be levied and applied for the same pur- pose until other provisions a.re made by a competent Legislature or authority". This would be some indication that taxes, duties,
cesses and fees imposed by reason of the extension to that territory, of Indian laws under the French Establishments (Application of Laws) Order, 1954, (S.R.O. 3315) would .be operative from and after
November 1, 1954. On November 1, 1954, the Govern- ment of India appointed a Controller oflmports and Exports for the French Establishments and para- graph 4 of that notification also contained the
following: " As regards orders placed outside the Establish- ments and finalised through the grant of licence by the competent French Authorities in accordance with the Laws and Regulations in force prior to 1st
November, 1954, licence-holders are advised to apply to the Controller of Imports and Exports for validation of licences held by them. No fees will be charged for these applications".
This notification, though it has no statutory force, was obviously part and parcel of S.R.O. 3314 and 3315, in so far ,as these related to the administration of the Import and Export (Control) Act, the Sea Cus-
toms Act and the Tariff Act and would therefore throw considerable light on what was intended by the framers of S.l~.O. 3315. The effect of this notification was that the authorization gmnted by or the per-
mission acquired from the French authorities was made to serve the same purpose as the grant of a licence to import under the Import and Export (Control) Act and nothing more. If its effect was in terms con-
fined to this, there could be no contention that goods imported in pursuance of the authorization should be exempted from customs duty. 2 S.C.R. Besides this, we might also draw attention to para-
'96' graph 17 of the Articles of Agreement dated October French India 21, 1954, under the terms of which the transfer of Imp0>ting cor- Pondicherry to the Union Government was. effected. porntion, Delhi No doubt, that was an agreement between two
v. Governments whose terms and covenants are not Chief Controller 01 ' t' ' bl · · · 1 b h t SR 0 Imports & Exports 3us 101a e m mumc1pa courts ut as t e wo . . s. __ themselves proceed on the basis of this agreement and
Ayyangar J. have been issued by virtue of the authority acquired by the Union Government under the Agreement, a reference to the terms thereof would be pertinent for understanding the scope or intent of the provisions in
these two orders-S.R.O. 3314 and 3315. Paragraph 17 of the Agreement-dated October 21, 1954-which has been referred to also by Subba Rao, J., in the Universal Imports Agency's case(') in support of the position
that the authorization under the French law to effect importation of goods into Pondicherry was tanta- mount to and had the same effect as the obtaining of a licence under the Import and Export (Control) Act,
1947-expressly made provision for the Government of India applying to the Establishment the relevant Indian laws relating to the imposition of customs and other duties in respect of goods which entered the
port after November 1, 1954. It reads: "All orders placed outside the Establishments and finalised through the grant of a Licence by competent authorities in accordance with the laws
and regulations in force, prior to the date of the de facto transfer, shall be fulfilled and the necessary foreign currency granted, as far as the goods are imported within the period of validity of the rele-
vant Licence. The goods shall, however, be liable to customs duty and other taxes normally leviable at lnd' ian ports ………………. .. As we have already pointed out, this is exactly what
is sought to be achieved by the conjoint operation of paragraph 6 of S.R.O. 3314 and the extension of fiscal laws to Pondicherry effected by paragraph 3 of S.R.0. 3315. It is precisely this that is also brought
out by paragraph 4 of the notification dated Novem- ber 1, 1954, extract.ed earlier. In the circumstances (1) [1961] I S.C.R. 305. [1962] '?61 it looks somewhat curious that the petitioners now
French India before us, who as interveners in the petitions by the ImporUng Coz- Universal Imports Agency, etc., supported the invok- porntion. TJ'lhi ing of para. 6 of S.R.O. 3314, or Art. 17 of the Arti- v.
cles of Agreement and para. 4 of the notification Chief Controller 01 dated November 1, 1954, as an aid to the eonstruction Impoifa '~ Expnzts of the words "things done" in para. 6 of S.R.O. 3315 Ayy;,;;;., 1. -the Government. resisting their use as an aid, should now take up the position that these materials are
irrelevant for determining the scope of those crucial words. In our opinion the petitioners are not entitled to have their goods imported into Pondicherry after November 1, 1954, without payment of duty notwith-
standing that the contracts, by reason of which the goods were imported, were entered into or the ship- ment took place before that date. The result ia that the petition is allowed and the
orders of the Government, of the Central Board of Revenue and the Collector of Customs are quashed only in so far as they impose a penalty on the peti- tioner for importing goods without a licence under
the Import and Export (Control) Act, 1947, and the Import Control Order. The respondents were entitled to demand and to enforce the payment of customs duty and the relief prayed in the petition in so far as
it relates to the quashing of the order in that respect and the refund of the duty collected, fails and is rejected. In the circumstances there would be no order as to costs. Das Gupta f.
DAB GUPTA, J.-We agree that in view of this Court's decision in M/s. Universal Imports Agency v. The Chief Controller of Imports and Exports (') the petitioners are entitled to relief as against the order
imposing penalty for importation of goods into Pondi- cherry, even though the actul importation took place, after November 1, 1954, as the contract in pursuance of which the importation took place had been con-
cluded prior to that date. We are not able to agree however that the position is different as regards the (1) [1961] I S.C.R. 305. 2 S.C.R. petitioners' prayer for relief against the levy of cus-
'961 toms duty on this very importation. Wit,h great hench India respect to our learned brethren, who have taken the rmpoding c,,,_ contrary view, we are of opinion that as long as the porntion, Delhi Universal Imports Agency case(') is not held to have
v. been wronglv decided we are bound by the authority Chfrf Control!" 0! f h d · '. } l'd, h h t" lmpcrts & Exj,arts o t at <'CJSIOn to 10 t at t e petitioners are en I- __ tied Lo relief agltinst the levy of customs duty as
Das Gupta 1. well. In :tll the three petitions which were before the Court in the U nivcrsal Imports Agency Case, the petitioners had entered into firm contracts of pur- chase by import with foreign sel!Prs, bPfore the date
of merger of Pondicherry with India; in all the cases, the goods reached the destination, the port of Pondi- cherry, after the date of merger. By that date (which was November 1, 1954) however the entire administra-
tion of Pondichcrry had become vested in the Govern- ment of India, but Pondicherry still remained a foreign territory. Under s. 4 of the Ii'oreign J urisdic- tion Act, an order had been made on October 30,
1954, being notification S.R.0. 3315, in consequence of which the Import and Export (Control) Act, 194 7, and the Sea Custunrn Act, 1878, along with several other Indian statutes became laws in force iu Pondicherry.
Para. 6 of this order was in these worda:- "Unless otherwise specifically provided in the Schedule, all laws in force in the French Establish- ments immediately before the commencement of
this order which corresponds to the enactments spe- cified in the Schedule shall cease to have effect, save as respects things done or omitted to be done before such commencement."
When the goods arrived at the Port of Pondi- cherry they were confiscated, on the ground that they had been imported without licence. But an option was given to pay a penalty in lieu of confiscation.
The petitioners paid the penalty and then came to this Court for relief. In making the order of confiscation and giving an option to the petitioners to pay penalt.y in lieu of con-
fiscation the Collector of Customs proceeded on the (l) [1961] I S.C.R. 305. Frenelt India lniporting Cor~ poration, Delhi v. [1962] basis of s. 3(2) of the Imports and Exports Trade
(Control) Act rea.d with s. 67(8) of the Sea Customs Act. The ground on which relief was sought from this Court was that to this act of importation, the Indian statutes mentioned in notification S.R.O. 3315 did not
:hief Co~t,o!ler of apply because this was "a thing done" before the mports '~ Expoils commencement of the order. If this contention suc- Das liupta 1. Cf'eded, there was no escape from the conclusion that the order of confiscation had no legal basis, for the
laws in force in the French Establishments regarding the importation of goods into Pondicherry did not require such licence. The controversy before the Court therefore was whether the import was or was not
"a thing done" within the meaning of the saving pro- visions of para. 6 of the order. On the one hand, it was urged that only the conclusion of the contract was "a thing done" before the commencement of the
order and the importation-the bringing of the goods across the customs barrier at Pondicherry port- which was the mere consequence of the contract could not, without undue strain on the language, he said
to be a thing done before the commencement of the order. Against this it was urged on behalf of the petitioners that the words "things donn" included not only the things actufl.l!y done and completed, but
also their consequence. The majority decision of this Court accepted the petitioners' conlention and also held that an import was the legal consequence of the contract that had been entered into by the petitioners
with the foreign dealers and so where the contract was concluded before the date of commencement of the order, the import by bringing the goods into Pondicherry Port was also a "thing done" before the
commencement of the order. It is helpful in this con- nection to re-read what was said by our brother Subba Rao, J., speaking for the majority. After setting out the relevant facts he proceeded to say:-
"On the said facts a short question arises w he- ther paragraph 6 of the Order protects the petitio- ners. While learned counsel for the petitioners contends that "things done" take in not only things
done but also their legal consequences, learned counsel for the State contends that, as the goods r96r were not brought into India before the merger, it F renc!i India was not a thing done before the merger, and there-
Impo.i;ng c,.,. fore, would be governed by the enautments specified pornUrn, Delhi in the Schedule. It is not necessarv to consider in v. this case whether the concept of i~port uot only Chi'/ Contrnller of takes in the factual bringing of goods into India, Imports & Exports but also the entire process of Import commencing
Das Gujita ]. from the date of the application for permission to import and ending with the crossing of the customs barrier in India. The words "things done" in para. 6 must be reasonably interpreted and, if so
interpreted they can mean not only things done but also the legal consequences flowing therefrom. If the interpretation suggested by the learned coun- sel for the respondents be accepted, the saving
clause would become unnecessary. If what it saves, is only the executed contracts, i.e., the contracts whereunder the goods have been imported and received by the buyer before the merger, no further
protection is necessary as ordinarily no question of enforcement of the contracts under the pre-existing law would arise." After pointing out that the phraseology used had been copied from various previous statutes and
referring to several English decisions as regards the interpretation of the words "things done" the conclu- sion of the majority was stated in these words:- "We therefore hold that the words "things done"
in paragraph 6 of the Order are comprehensive enough to take in a transaction effected before the merger, though some of its legal effects and conse- quences projected into the post-merger period."
The question whether imports were the conse- quences of the contract that had been entered into before the date of merger was next examined even though this position does not appear to have been
seriously disputed, and the conclusion was stated thus: " ……… It may be stated that a purchase by im- port involves a series of integrated activities com- mencing from the contract of purchase with a fore-
ign firm and ending with the bringing of the goods r96I French India Importing Co1- poration, Delhi v. Chief Controller of JmpJrts &- Expo~ts Das Gupta .J. [1962) into the importing country and that the purchase
and resultant import form parts of the same tran- sn.ction. If so, in the present case the bringing of the goods into India and the relevant contrac:ts entered into by the petitioners with the foreign
dealers form pri,rts of the stime transaction. The imports, therefore, were the effect or the legal con- sequences of the "things done", i.e., the contracts entered into by the petitioners with the foreign dea-
lers." Applying the principles of law thus enunciated the majority held that para. 6 of the order saved the tran- sactions entered into by the petitioners and that the respondent had no right to confiscate their goods on
the ground that they were imported without licence. Aecordingly it gave the petitioners the relief they sought for. ln the present case also the question is whether the act of importation can get the benefit of the saving
provisions in para. 6 of the order. We cannot see how that benefit can be denied in respect of customs duty, unless we refuse to apply the principles laid down in the Universal Imports Agency case; and we
cannot see how we can refuse to apply these prin- ciples. It is true that in that case the Court had not to deal with the question of customs duty. The ques- tions for decision were however pure questions of Jaw:
(i) whether the imports were the effect or the legal conseqnence of the "things done", i.e., the contracts entered into by the Indian buyers with foreign dealers and (ii) whether "things done" mean not only things
done but also the legal consequences flowing there- from. Whether these questions of law fell to be decid- ed in a case, where the benefit of the saving clause is sought against an order of confiscation or as in the
present case it is sought against an order for payment of customs duty is wholly irrelevant for tho decisions of these qtrnstions of law. We wish to m11ke it clear that we have no opinion to express as regards the
decisions of these questions of law by the majority in the Universal Imports Agency case. What we cannot ignore is that the law laid down by the majority on \'·" those questions in that, case i.s law and should be fol-
r96r lowed by this Court as it has to be followed by other French India courts, the only difference being that this Court can Impo,ting c°'- overrule those decisions. But so long as that is not poration, Delhi
done the law as laid down there is good law, which we v. in deciding the present case must obey. ApplyingChfr/ Confroller of that law we are of opinion that we are bound to hold Imports 0 · Exports that the provisions in the Sea Customs Act for levy Das Gupta J. of customs duty on imports of the goods which were
imported by the petitioners in the present case do not apply to these imports-unless there is something in tho order itself-which deprives the act of importation from the benefit of the saving clause in respect of the
customs duty. No such thing can b3 seen in the order. Of the 6 paras. of which it consists the first merely gives its name and says that it will come into force on the 1st day of November, 1954. The second para.
defines the French Establishments. The third para. which is the operative para. says that the enactments specified in col. 3 of the Schedule as in force before the commencement of this order are hereby applied
to, and shall be in force in French Establishments subject to (a) amendments, (b) modifications, if any, specified in column 4 of the Schedule and (c) the sub- sequent provisions of the order. Para. 4 contains a
rule of construction, 'Viz., reference in any enactment, notification, rule, order or regulation, applied to the French Establishments by this order; to India or to States or State generally shall be construed as includ-
ing a reference to the French Establishments; and some other similar provisions. Para. 5 empowers the court, tribunal or authority required or empowered to enforce any specified enactment, in the French Esta-
blishments, to construe the enactment with such alte- rations, not affecting the substance as may be neces- sary or proper. Para. 6 which has already been set out contains the saving clause. It is worth noting
that the provisions for the application of the enact- ments to the French Establishments is in terms made subject to subsequent provisions of the order and thus clearly to the provisions of para. 6.
There is thus 430. [1962) I96r nothing in the order itself, which makes the saving provision in para. 6 inapplicable to the levy of cus- F"nch India toms duties. Nor has our attention been drawn to
Importing Cor- poration, n,thi any later law which would have the effect, of depriv- v. ing the petitioners from the benefit of those saving Chief Controller of clauses. Imports & Exports
On behalf of the State reference was made to para. 17 of the Articles of Indo-French Agreement. After Das Gupta ]. b stating that all orders placed outside the Esta lish- ments and finalised through the grant of a licence by
competent authorities shall be fulfilled and the neces- sary foreign currency granted, so far as the goods are imported within the period of the validity of the rele- vant licence, goes on to say, the goods shall however
be liable to customs duty and other taxes normally leviable at Indian ports. It is argued that this ex- pression of intention by the Government of India as mentioned in this Agreement to realise customs duty
on goods imported after the merger should be taken into consideration in applying the saving provisions of the order in notification S. R. 0. 3315. We are un- able to persuade ourselves that there is any justifica-
tion in reading into the order S. R. 0. 3315 anything to the contrary that might have been expressed in the Indo-French Agreement. It is true that the pro- visions of this para. of the Indo-French Agreement
were referred to in the majority judgment in the Uni- versal Imports Agency case and it was said that the conclusion already reached were reinforced by what appeared in para. 17. It is one thing however for a
court to consider that conclusions reached on legal principles is in keeping with the intention expressed in a document between high contracting parties, it is quite another thing to say that the conclusion reached
on legal principles should be departed from because it. seems to be at variance with what has been said in such a document. In view of what was agreed to in para. 17 of the Indo-French Agreement there would
have been no difficulty for the Government of India to make provision when providing for the saving of the operation of certain laws to be applied to the French Establishments in respect of "things done"
.I' before the commencement of the order to exempt the '96' levy of customs duty from such saving. That was French India not done. There is nothing in law that we are aware Imp,,rting Cor- of which would compel the Government of India poration, Delhi because of the above Agreement in para. 17 to extend
v. the provisions of levy of customs duty in the Sea Cus- Chief Controlltr 0! toms Act in respect of things done before the com- Imports'"" Exports mencement of the order. Though the Government of Das Gupta J. India could have well made the exception when insert-
ing the saving clause in the order S. R. 0. 3315 in respect of levy of customs duty they did not do so. It will be improper in our opinion to hold that even though the Government of India did not expect it we
should do so to give effect to what is considered to be the Government of India's intention as expressed in the ludo-French Agreement. Reference has also been made to another order made by the Government of
India, i.e., S. R. 0. 3314 which saved the operation of the pre-existing French law except in so far as it had been affected by S. R. 0. 3315. Paragraph 5 of this order provides that all laws in
force in the French Establishments immediately before the commencement of the order and not repealed by paragraph 6 of the French Establishments (Applica- tion of Laws Order) 1954 that is the order in S. R. O.
3315 shall continue to be in force until repealed or amended by competent authority. Para. 6 of the same order (S. R. 0. 3314) provides that all taxes, duties, ceases or fees which immediately before the
commencement of the order.were being lawfully levied in the French Establishments in so far as such levy has not been discontinued by any of the laws extend- ed to the French Establishment by the French Esta-
blishments (Application of Laws Order) 1954 continued to be levied. Thus if any customs duty had been pay- able under the French law which was in force prior to November 1, 1954, that would have continued to be
payable in respect of "things done" which are saved from the operation of the Indian laws in the matter by para. 6 of S. R. O. 3315. We are unable to see how either of these provisions
in S.R.O. 3314 or anything else therein can deprive [1962] z96z the petitioners from the benefit of the saving clause in para. 6 of the French Establishments (Application French India
0 d f h 1 f of aws r er) 1 54, in respect o t e evy o cus- Impo,,ting Cor- poration, Delhi toms duty. v. What is it that is saved by this saving provision Chief Controllu of in para. 6? It is the things done before the commence. Imports & Exports ment of the order. If the thing done did not include the bringing of the goods across the customs barrier,
Das Gupta 1· it would not have been saved. It was held in the Universal Imports Agency case that bringing the goods across the customs barrier was a "thing done" before the commencement of the order when the con-
tract in pursuance of which this was done, was con- cluded before the date of commencement of the order. Under the saving clause in para. 6, this "thing done" -i.e., the bringing the goods across the customs bar-
rier-is saved from a body of Indian laws and is in- tended to be controlled by a corresponding body of the previously prevailing French laws. It is not pos- sible without reading into para. 6, some words like-
"provided that in respect of levy of customs duty under the Sea Customs Act, the corresponding French law will cease to have effect, if the actual import takes place after the commencement of the order"-to hold
that the levy of customs duty will be governed by the Indian law, in respect even of an import-which was a "thing done" before the commencement of the order. We are of opinion that on the law as laid down in
the Universal Imports Agency case the importation of goods in the present case in pursuance of a con- tract which was concluded before the date of the com- mencement of the order (S.R.O. 3315) was governed
by the French laws and not by the Indian laws, no less as regards the question of levy of customs duty than as regards the question of import licences. Under the French law no duty was payable on these imports.
Consequently these petitioners were not liable to pay duty on these imports. In our opinion, the petitioners are entitled to the relief they have prayed for, both against the levy of
2 S.C.R customs duty and against the order imposing penalty for importation without licence. We would accordingly allow the petition. French India Importing Cor- poration, Delhi BY CouRT. In accordance with the opinion of the
v. majority, the petition is allowed in part and the orders Chief Controller of of the Government in so far as they impose a penalty Imports & Exports on the petitioners for importing goods without a
licence, are set aside; except to this extent., the peti- Das c .. pta J. tion shall stand dismissed. THE REGISTRAR, CO-OPERATIVE SOCIETIES v. DHARAM CHAND AND OTHERS (P. B. GAJENDRAGADKAR, A. K. SARKAR,
K. N. WANCHOO, K. C. DAS GUPTA and N. RAJAGOPALA AYYANGAR, JJ.) Co-operative Societies-Co-operative Bank-Defalcation of bank funds-Show cause notice to committee members and subsequent removal by the Registrar-Misfeasance application by shareholders against committe.e members-Hearing of application by the Registrar -Legaiity-Bias-N atural justice-Co-operative Societies Rules, rr. 17, 18, :JG(J}-Co-operative Societies Act, 1912 (2 of 1912), s. 17.
An investigation of the affairs of a Co-operative Bank regis- tered under the Co-operative Societies Act, 19r2, on the dis- appearance of the manager of the bank in r953, showed that a very large amount of money had been defalcated. On February 26, r955, the Registrar of Co-operative Societies gave notice to the members of the managing committee of the bank asking
them to show cause why the committee should not be suspended under r. 30(3} of the Rules framed under the Act. In reply the members denied allegations of mismanagement etc., but the
Registrar, however, appointed an administrator of the bank after removing the managing committee. Jn the meantime, some of the shareholders of the bank made an application before the Registrar under r. r8 of the Co-operative Societies Rules, in the nature of a misfeasance proceeding against the members of the managing committee, praying for an award directing them to pay the amount found defalcated, on the ground that it had been occasioned by a glaring breach of the law and the rules April 27.